Chief Economics Minister reconfirms VAT rise to 12% 2025
Following press speculation of a 2024 VAT rise, Chief Economic Minister, Airlangga Hartaro, has confirmed that the second-stage Value Added Tax increase from the current 11% to 12% will only come in January 2025. Airlangga said the government is currently formulating macro-economic and fiscal policies, including the new VAT rate, as the basis for drafting the 2025 state budget.
As part of the original Tax Harmonisation Law, VAT was scheduled to rise from 10% to 12% in two stages: 2022; and 2025.
April 2022: first stage 10% to 11% VAT increase completed as economy recovers from COVID-19
The increase in VAT is part of a set of reforms to broaden the tax base of southeast Asia’s largest economy. Despite ongoing COVID-19 pandemic issues, the economy grew in quarter 2 of 2021 for the first time in over a year. With some renewed confidence in consumer spending, the government had proposed the tax changes to the House of Representatives on 16 August 2021 as part of the 2022 budget.
Only Saudi Arabia and Nigeria have so far raised VAT rates in the wake of the coronavirus pandemic. Most other countries have temporarily reduced rates, particularly in the most hard hit sectors of tourism and hospitality.
Indonesia introduced Value Added Tax in 1984. There is registration threshold of IDR4.8billion, although there is scope for a voluntary VAT registration.
VAT Calc’s global VAT and GST rates online database provides a free look-up rate search for over 200 taxing jurisdictions.
